The act of financing an activity or broader operations through the issue of junk bonds. These bonds have low credit ratings and are comparatively high risk. As a result, the issuer must pay higher interest rates. Junk financing is used in some takeover situations where the acquiring company is cash poor.
The raising of funds by issuing unsecured high-yield securities, for example, during takeover attempts in which the acquiring firm has little cash and must issue unsecured debt to finance the acquisition. Also called high-yield financing.